John makes some excellent points in this entry. I wrote on his comment thread:
Another perverse effect of the current regime is that it slows down progress by encouraging trade secrets at the expense of openness through the patent system. Suppose company X comes up with a way to perform a service more effectively. If they keep it a trade secret as they deploy the improved service, it will may be very difficult for others to recognize that the new service infringes on some patent, because some aspects of services can be implemented in many different ways. If, on the other hand, company X files a patent that cites as prior art a patent by company Y, they open themselves to having to pay royalties to Y, or worse.